In 2010, Nigeria will complete 50 years since it first started exporting crude oil from Oloibiri in Rivers State. The present state of its economy shows that the financial windfall obtained from oil exports have not boosted the economic growth of the country. In fact, it has lead to environmental degradation, corruption, wide spread poverty and conflict. The elementary analysis of Nigeria’s energy consumption pattern shows the domination of oil. Due to the lack of Nigeria’s refining capabilities, 70 percent of its domestic fuel is imported and has to be highly subsidized by the government. However, a large proportion of the rural population in Nigeria still pays one and half times more than the actual petroleum prices because of limited accessibility. Decentralization of energy resources at affordable prices, therefore, becomes vital to meet the basic energy needs in Nigeria. An effective way that this can be achieved is through expanding renewable energy resources such as solar, small hydro-power projects, biomass and wind energy.

Over the past few years, the Nigerian government has shifted its focus towards harnessing alternative energy. As noted earlier, the remote areas in Nigeria lack access to energy supply with less than 20 percent of the households connected to the national grid. Given this, basic energy needs such as pumping of water for irrigation and rural electrification can be achieved through development of solar energy and small hydro-power projects in remote villages. An unbridled supply of power will ensure progress of sectors and make the rural economy more self-reliant. 

The topography of Nigeria is such that it gives ample scope for generation of biomass. The north central region creates large amount of crop residues and farm wastes. In addition, the municipal solid wastes generated from expanding urban centers such as Lagos and Kano can also be utilized to produce energy through proper solid waste management. 

A large part of the population in Nigeria depends almost entirely on fuel wood at present. However, studies have shown that only 5-12 percent of the fuelwood is gainfully utilized for cooking and domestic purposes annually. If this trend of overdependence and inefficient use of fuelwood continues, the southern part of the country is likely to become vulnerable to erosion and desertification in the future. Biomass is no doubt a viable alternative energy option for Nigeria; however, it is necessary to expand biomass energy derived from municipal and agricultural wastes and also efficiently use fuelwood in order to conserve forest resources. 

Apart from solar, hydro-power and biomass energy, Nigeria also stands to gain from investing in wind energy. Feasibility studies have shown that certain parts of Nigeria have the potential to generate power from wind energy. In the past, investments have been made to harness wind energy to pump water, especially in the northern region in states such as Sokota and Garo. However, as prices of domestic petroleum products dropped, wind energy was no longer considered a cheaper alternative over fossil fuels. Given the present volatility of oil prices, Nigeria must look at generating energy from wind energy.

Currently only about 0.6 percent of the total electricity generated is contributed by renewable energy. The Nigerian government has taken positive steps at the policy level to harness renewable energy. In 2007, it launched the Renewable Energy Master Plan (REMP). The Plan envisions generating an overall 2,945 MW of energy from wind, solar, small hydro and biomass by 2025 through short term, medium term and long term projects. And yet, little progress has been made in implementing these projects till now. Nigeria requires not just proactive policies but also greater political commitment and large scale foreign investments to diversify its energy base. Foreign investments in renewable energy will open up the market for competition and make energy more cost effective in the long-run. 

One of the major pitfalls of oil revenues was that it resulted in the concentration of wealth in the oil sector. Adoption of renewable energy technologies will lead to the growth of non-oil sectors and promote equitable distribution of income and wealth. The world is slowly moving towards developing a non-fossil energy system to tackle climate change. Owing to this, the future demand and price of fossil fuels are likely to substantially diminish. The economic impact of this will be greater on the Nigerian economy since oil revenues contribute almost 70 percent of Nigeria’s federal revenue.

Given the profitable nature of fossil fuels, enlarging the role of renewable energy in the overall energy consumption mix will pose a serious economic and political challenge. However, it is important to note that at least two forms of alternative energy resources such as solar and biomass are available in abundance and accessible in all parts of the country. In addition, ease of application of technologies in rural areas and environmentally sustainable nature of alternative fuel offers immense opportunities for Nigeria to progressively invest and expand renewable energy resources to meet growing energy demand.